Published on -11/15/2013, 10:29 AM
Earlier this week, the governor of Missouri made an offer that elected officials in Topeka should be cheering about. Gov. Jay Nixon wants a joint moratorium between the two states to end job-poaching in the Kansas City metropolitan area.
Every year, economic development gurus from the bordering states put together multi-million-dollar packages that lure businesses from one side of the metro to the other.
"This problem -- unique to this region -- of taking jobs that already exist and treating them as if they're brand new, is the unintended consequence of incentive programs in both states, and all of us have a shared responsibility to fix it," Nixon said while addressing the Greater Kansas City Chamber of Commerce.
To his credit, Kansas Gov. Sam Brownback was in agreement. In fact, Brownback has proposed the same idea in the past, so he thanked Nixon for joining the effort.
"I have been open to resolving this issue for more than a year, and in that time have engaged in active discussion with Gov. Nixon," Brownback said in a statement. "We also have talked with members of the Missouri Legislature who are interested in putting an end to this 'war.' "
But if Rep. J.R. Clays, R-Salina, is indicative of the Kansas Legislature, there remains a lot more convincing to take place.
"Looks like Missouri is surrendering," Clays wrote on his legislative Twitter account. "Can't compete with Kansas for jobs. We'll continue to incentivize."
If he had left it at the first two sentences, we might have taken the tweet in jest. The "We'll continue to incentivize" makes it clear he's serious.
It also makes clear either he doesn't understand the incredibly expensive shell game taking place in Kansas City that negatively affects both states or, worse, doesn't care.
Clays' unwillingness to stop giving away non-productive corporate subsidies is a position shared by many of his colleagues. Last year, the Missouri Legislature debated a bill that would force the Show Me State to stop poaching jobs from its neighbor -- as long as their Kansas counterparts would pass something similar. No such legislation surfaced in Topeka, so Missouri lawmakers dropped it.
In the past five years, Kansas and Missouri have committed more than $750 million in tax incentives and bonds to approximately 200 companies either to relocate to or expand in the Kansas City area. More than a handful of those already were in the metro, so nothing moved other than a few jobs. Commuting employees didn't change their residences, just where they punch a clock.
Examples are not hard to find.
JPMorgan Retirement Plan Services moved from Kansas City to Overland Park for $15.3 million in incentives. So did KeyBank Real Estate Capital for $15 million and Teva Nueroscience for $40.7 million. AMC Entertainment was lured to Leawood from Kansas City for $47 million.
Missouri has taken its fair share back. Applebee's left Lenexa for Kansas City for $12.5 million. Freightquote took the same path for $64.3 million. North American Savings Bank moved from Overland Park to Kansas City for $5.9 million, while Velociti departed Kansas City, Kan., for Riverside with a mere $1.6 million inducement.
In each case, the state losing the company loses all the tax revenues while the gaining state forgives all the tax revenues.
The only winner is the company itself, which generally receives a brand-new building and all the associated services paid for by taxpayers who don't have such exemptions.
Kansas legislators truly need to examine the situation and act, particularly while there's positive indication from Missouri's elected leaders to stop poaching from each other. And they need to make it law. The two states signed an anti-poaching agreement some 15 years ago that wasn't paid attention to in the least. In fact, the Kansas Department of Revenue can't even find the document.
Both states' governors recognize the real gains to be had if their economic development teams weren't working against each other. So does the Missouri Legislature. All that is required is a majority of Kansas lawmakers.
We hope Rep. Clays doesn't represent the majority position.
Editorial by Patrick Lowry